It was nothing but a shell when Douglas and Keena Kelly laid eyes on it–just walls and gravel. But the Illinois-based owners of Ouvxz (pronounced OO-vix) imagined that with their personal touch, the vacant structure could be the perfect spot for a distribution warehouse to house their health products.
Ouvxz launched in 2003 on the strength of its first invention, the Soothae, a specially designed post-pregnancy panty. The company reported roughly $250,000 in 2006. A distribution deal with Walgreens and an e-commerce plan has the company poised to clear $500,000 this year. But Ouvxz needed a fully equipped distribution center to do it right. “In order for our product to receive national attention and to effectively get the product out to the customer, building the center was key to our goals,” says Keena, who left a $75,000 teaching job to start Ouvxz. “It’s going to help us provide excellent customer service and create jobs in the community.”
Douglas, a real estate agent with Coldwell Banker before starting the company, tapped his resources to quickly scout a sizeable property, one right near a major highway. He negotiated a deal with a developer building warehouses. The 13,000-square-foot center, which Ouvxz personalized for more than $20,000, includes a boardroom, a customer-service call center, two docks, six offices, and two private baths, with the majority of space allotted to shelve inventory. Ouvxz inked a three-year lease, with an option to buy in two years.
For
the Kellys, it was easy to see that they needed the facility. Ted Pollock, president of Pollock Logistics Consulting L.L.C., a Connecticut-based firm that specializes in supply chain planning, says that if your company meets the following criteria, it may be time to invest in a warehouse/distribution facility:Labor costs are rising although the profile of orders or customer demands for unique services hasn’t changed much.
Aisles are blocked, routinely or particularly during peak periods (this may suggest a need to consider alternate means to alleviate peaking or the use of public warehousing, where you pay only for the space you need).
Customer service levels are beginning to suffer, particularly for on-time shipping and order errors.
Customers are demanding shorter lead times and/or more reliable delivery times.
Even if the above criteria doesn’t apply to you, if yours is a fast growing business, you don’t want operations to fall behind growth. Planning a distribution system to support your business plan is proper strategic business management.
Kyle Whitesell of Bob Moore Construction Inc., an Arlington, Texas-based company experienced in building commercial properties, advises business owners to make sure a warehouse is tailored to the product and the needs of the company. “Get a developer and/or broker involved as early as possible,” Whitesell says. “They can give advice on the cost effectiveness of the construction. It’s never fun to find out how much something will cost after the fact.”
With the facility now in place, Ouvxz has streamlined a process that helps deliveries arrive on time. Ultimately, the Kellys would prefer complete control over all aspects of shipping with use of their own trucks. For now, the manufacturing plant drops off products to the warehouse. In turn, Ouvxz relies on UPS Freight to ship products to retailers and online shoppers, whose orders are mapped from the call center to the warehouse. A computer program called NetSuite scans products to help keep the company on top of inventory. The warehouse, Keena says, was built to give them quality control, but also the flexibility to grow. “One day, we want to take on the manufacturing, and that’s a possibility for us with the center.”